Getting to Plan B: Breaking Through to a Better Business Model

You have a new venture in mind. And you've crafted a business plan so detailed it's a work of art. Don't get too attached to it. As John Mullins and Randy Komisar explain in Getting to Plan B, new businesses are fraught with uncertainty. To succeed, you must change the plan in real time as the inevitable challenges arise. In fact, studies show that entrepreneurs who stickYou have a new venture in mind. And you've crafted a business plan so detailed it's a work of art. Don't get too attached to it. As John Mullins and Randy Komisar explain in Getting to Plan B, new businesses are fraught with uncertainty. To succeed, you must change the plan in real time as the inevitable challenges arise. In fact, studies show that entrepreneurs who stick slavishly to their Plan A stand a greater chance of failing-and that many successful businesses barely resemble their founders' original idea. The authors provide a rigorous process for stress testing your Plan A and determining how to alter it so your business makes money, solves customers' needs, and endures. You'll discover strategies for: -Identifying the leap-of-faith assumptions hidden in your plan -Testing those assumptions and unearthing why the plan might not work -Reconfiguring the five components of your business model-revenue model, gross margin model, operating model, working capital model, and investment model-to create a sounder Plan B. Filled with success stories and cautionary tales, this book offers real cases illustrating the authors' unique process. Whether your idea is for a start-up or a new business unit within your organization, Getting to Plan B contains the road map you need to reach success. ...more

ebook, 224 pages

Published
September 8th 2009
by Harvard Business School Press
(first published 2009)

Community Reviews

Good book with lots of examples. You can 90% by reading the first couple chapters and skimming the rest.

Notes:

Your First Plan Probably Will Not Work

The research on new products success and failure indicates that it takes fifty-eight new products ideas to deliver a single successful new product.Getting to Plan B is about how to avoid getting stuck in a rut, missing real opportunities, or worse, closing your doors.Running out of cash isn’t a cause; it’s a symptom or a signal that the company’s busGood book with lots of examples. You can 90% by reading the first couple chapters and skimming the rest.

Notes:

Your First Plan Probably Will Not Work

The research on new products success and failure indicates that it takes fifty-eight new products ideas to deliver a single successful new product.Getting to Plan B is about how to avoid getting stuck in a rut, missing real opportunities, or worse, closing your doors.Running out of cash isn’t a cause; it’s a symptom or a signal that the company’s business model didn’t work.Should outline the five elements in a business model, to determine the economic viability and whether the business is likely to run out of cash or not.The best ideas are those that solve somebody’s pain, some customer problem you’ve identified for which your solution might work.Plans are useless but planning is indispensable.Systematically Develop Business Plans

Analogs

Predecessor companies that are worth mimicking in some way. They do not have to be in the same industry. For example, two analog companies for the iPod/iTunes would be sony and napster. Sony proved that people would be willing to use personal music players with headphones and napster proved that people were willing to download music.

Antilogs

Predecessor companies which you explicitly choose to do something different. These companies were probably not successful. For example, the antilog companies for the iTunes were the for-pay music subscription services that existed at the time. Instead of paying a subscription to access a library the the service provider controlled, Apple allowed consumers to purchase a single song and download it to their computers.

Leaps of Faith

Beliefs you hold about the answer to questions raised by your business plan despite having no real evidence that these beliefs are actually true. These must be tested for validity as quickly and cheaply as possible. Apple's leap of faith was that music listeners would actually pay for their music.

Dashboards

The process of systematically recording your leaps of faith, the hypotheses that grow out of them, and the results of those hypothesis tests. This allows you a very focused way to see if your business plan is working.

Mix and Match

To create a successful business plan, mix and match analogs and antilogs. Form leaps of faith and then test them systematically using dashboards....more

Every (would be) entrepreneur who has enjoyed reading Randy's ,Goodbye Carrier, Hello Success` knows Randy`s wisdom for entrepreneurs. It'd call him the ,Zen Entrepreneur` for his enlightement and razor sharp thinking (for a taste, check out Youtube ,the biggest successes are often bred from failures).

The book is about a rarely covered topic: Getting to plan B (if necessary to Z). If the founders of Google, PayPal or Starbucks had stuck to their original plan,Ordering this book was a no-brainer.

Every (would be) entrepreneur who has enjoyed reading Randy's ,Goodbye Carrier, Hello Success` knows Randy`s wisdom for entrepreneurs. It'd call him the ,Zen Entrepreneur` for his enlightement and razor sharp thinking (for a taste, check out Youtube ,the biggest successes are often bred from failures).

The book is about a rarely covered topic: Getting to plan B (if necessary to Z). If the founders of Google, PayPal or Starbucks had stuck to their original plan, we might have never heard of them. PayPal's plan A didn't work. Neither did B, C, D, E nor F. Plan G stroke gold.

This is not a book about ,business planning`. It's a book about, in a sense, ,business discovering`. Getting to Plan B is a structured process of discovering, over time, a fluid pattern among the five business model* elements that, working together, will make the economics work (provided the business model is sound), so you don't run out of money along the way.

Every (would be) entrepreneur who has enjoyed reading Randy's ,Goodbye Carrier, Hello Success` knows Randy`s wisdom for entrepreneurs. It'd call him the ,Zen Entrepreneur` for his enlightement and razor sharp thinking (for a taste, check out Youtube ,the biggest successes are often bred from failures).

The book is about a rarely covered topic: Getting to plan B (if necessary to Z). If the founders of Google, PayPal or Starbucks had stuck to their original plan,Ordering this book was a no-brainer.

Every (would be) entrepreneur who has enjoyed reading Randy's ,Goodbye Carrier, Hello Success` knows Randy`s wisdom for entrepreneurs. It'd call him the ,Zen Entrepreneur` for his enlightement and razor sharp thinking (for a taste, check out Youtube ,the biggest successes are often bred from failures).

The book is about a rarely covered topic: Getting to plan B (if necessary to Z). If the founders of Google, PayPal or Starbucks had stuck to their original plan, we might have never heard of them. PayPal's plan A didn't work. Neither did B, C, D, E nor F. Plan G stroke gold.

This is not a book about ,business planning`. It's a book about, in a sense, ,business discovering`. Getting to Plan B is a structured process of discovering, over time, a fluid pattern among the five business model* elements that, working together, will make the economics work (provided the business model is sound), so you don't run out of money along the way.

It’s the second book I read from Randy Komisar (after the Monk and the Riddle) and I have to admit I preferred his first book even if Getting to Plan B is quite good too. I might have been slightly misled by the title even though the subtitle was quite clear, Breaking Through to a Better Business Model. But it might be I never read seriously subtitles. I thought the book was about what you do when you were wrong first. But it is more subtle. It is not so much about what happens if your idea wasIt’s the second book I read from Randy Komisar (after the Monk and the Riddle) and I have to admit I preferred his first book even if Getting to Plan B is quite good too. I might have been slightly misled by the title even though the subtitle was quite clear, Breaking Through to a Better Business Model. But it might be I never read seriously subtitles. I thought the book was about what you do when you were wrong first. But it is more subtle. It is not so much about what happens if your idea was not good vs. what about finding a better or valid business model. If it says better, you plan A might have been good enough! The other reason I was not totally convinced comes from my feeling the case studies were chosen to illustrate a theory, a process, a framework, but did not prove it. I had the feeling the same case studies might have been used to illustrate opposite views, but again, who am I to say such things!

Mullins and Komisar’s book remains a very good book thanks to a rich variety of cases and lessons. In their preface, the authors say important things. “Entrepreneurship is not easy. [..] they are countless tales of companies that quickly went down in flames. Ultimately [many of them] failed because the economics of their business model didn’t work” [Page viii]. I was a little puzzled because I am not so sure; many companies failed because customers did not buy. But it might be the same! The authors claim “they developed a process and a framework to discover the best business model” [page ix]. Again I am puzzled, I am not sure this exists. But still, they certainly provide interesting tools.

One of the most interesting one is the use of analog and antilogs, that I had already mentioned when reviewing Ries’ Lean Start-up. Again For the iPod, the Sony Walkman was an Analog (“people listen to music in a public place using earphones”) and Napster was an Antilog (“although people were willing to download music, they were not willing to pay for it”). Analogs are successful predecessors worth mimicking in some way whereas antilogs are predecessors (whether successful or not) in light of which one explicitely decides to do things differently [Page 14]. But when they claim Apple’s plan B was to transform itself from a struggling PC maker to a consumer electronics powerhouse [page 21] , I find the broadness of the plan B concept really too broad!

Then their methodical dashboard is about validating leaps of faith by testing hypotheses. And what is new compared to other important references such as Steve Blank’s customer development is the focus on the business model through 5 elements: revenue, gross margin, operating expenses, working capital and investments. Why plan A won’t work? The authors answer, page 3, by quoting Albert Page: “it takes 58 new product ideas to deliver a single successful new product”. And a few lines below, “figuring out what the customer wants is not easy.” PayPal worked on its plan G! Google’s plan C works. Plan A had no revenue model, plan B was licensing, plan C was advertising. (But remember Google was always a search engine. In terms of product, it was still plan A! That is why I said before I was misled by the title Getting to Plan B)

They begin chapter 1 with the following: “Mediocre success – finding a passable business but missing the real potential – is equally problematic. Arguably, it’s worse than missing the target completely because it will tie down your considerable talent in a venture with no real future. You and other entrepreneurs and innovators like you are the lifeblood of today’s economy. And to waste your talent on something mediocre would be a real shame.” Now the book shows that success does not have only one way. The Silverglide case [pages 74-78] shows that an entrepreneur can succeed with $80k for friends and family money whereas I am not even sure how many hundreds of millions Jeff Bezos needed before reaching profitability for Amazon.com [pages 186-192]. Many case studies illustrate how to optimize each of the 5 business models elements [chapters 3-7], whereas chapter 8 shows that you will need to find a balanced solution trying to get the best of these 5 key financial objectives. Amazon.com needed to reach a very large size to make its automated process worthwhile but “great lessons are born from leaps of faith” [page 192].

I fully agree with their final chapter’s early sentence: “As you know by now, this is not a book about business planning. It’s about, in a sense, business discovering. Quoting Eisenhower, “plans are useless, but planning is indispensable” or McArthur: “No plan ever survives its first encounter with the enemy”. So again, the building blocks of the process are:- an identified customer pain and a solution or an opportunity to offer delight, - some relevant analogs and antilogs, - which lead to some as-yet-untested leaps of faith, - which lead to a set of hypotheses to test them, - a dashboard to focus your attention on what’s most important right now and to provide some mid-course corrections, - all comprehensively organized, in just the right sequence, to inform and create the five elements of your business model. [page 208]

Does this mean you need a plan B right from the start? The answer [page 212] is nice: “There’s a temptation to think that, since plan A probably won’t work, you should have plan B in your hip pocket. Don’t do it. A contingency plan would probably be just as flawed.” There is clearly in the eraly 21st century a new trend in that business plans may not be a sufficient tool, not to say even necessary. From Randy Komisar, through Eric Ries, to Steve Blank (including my recent account of Cohen’s Winning opportunities), the important element is the discovering process of your business, of your customers in an iterative and flexible manner. This is clearly an important lesson to remember....more

I wonder if there is a point beyond which we become too impatient for books styled like lectures, albeit with tons of case studies. Two chapters through, I have shelved it for now.

This book is, on the whole, a good compilation of case studies, categorized as analogs and antilogs, with valuable, though not breakthrough, insights for early stage entrepreneurs. Be that as it may, all of us, not only entrepreneurs have made plans and hence must have got to a Plan B at some pointNot for one sitting.

I wonder if there is a point beyond which we become too impatient for books styled like lectures, albeit with tons of case studies. Two chapters through, I have shelved it for now.

This book is, on the whole, a good compilation of case studies, categorized as analogs and antilogs, with valuable, though not breakthrough, insights for early stage entrepreneurs. Be that as it may, all of us, not only entrepreneurs have made plans and hence must have got to a Plan B at some point. This book could teach us to critically examine and move from Plan A to Plan B in a structured format. The first first two chapters attempt to give the reader a hang of the basic idea. The rest of the book is full of specific lessons from specific cases. ...more

A very good book about how to discover your business model.The most interesting and different idea I found in the book is the one about learning from other companies (actual or historic) to help find and validate your business hypotheses. Learn from successful examples worth mimicking in some way and examples to which you explicitly choose to do things differently

Like most business books, not too long. A very high-level summary of one way to think about a business model. It seems pretty practical to me; the most interesting parts are the examples given of different companies (Toyota, eBay, Zara, etc...) and how they solved some problem in their business model.

I would recommend this book to aspiring entrepreneurs, particularly those without a background in business or accounting, as an overview to the concept of iteration. For further exploration on iteration, I would also recommend work by Steve Blank and Eric Ries.

Excellent guide for any entrepreneur, whether he or she is looking to improve an existing business plan or creating a new, viable one. Very practical advice and includes plenty of illuminating examples.